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Lucrius

Tax the Rich

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"While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks," wrote Buffett, who has mentioned in past interviews that the rich should pay higher taxes"

Opinions please.

Tax the Rich

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The Real Reason Warren Buffett's Taxes Are Low

Mr. Buffett is not sharing the real reason that he doesn’t pay much in the way of income tax relative to his great fortune. The secret is hidden in plain sight. Mr. Worstall alludes to it when he mentions that Berkshire Hathaway does not in fact pay dividends. Mr. Buffett’s secret which you can find blasted all over the Internet is one of his famous quotations:

Our favorite holding period is forever

You only pay income taxes at any rate on realized appreciation. An investment with a holding period of forever incurs a capital gains tax of 0%, while all along the holder can be getting wealthy from appreciation.

Not only the above, but Buffet is avoiding the fact that the wealthy do not pay taxes on their wealth only on their income. So, "taxing the rich" is a misleading statement meant to invoke class warfare. He says he only paid 17% but does not say what his yearly income was nor what deductions he used. If he wants to contribute to the federal government, no one will stop him. But voluntary association is not part of his view of social relationships.

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Buffett is a living example of Adam Smith's division of labour. Whilst the man is undoubtedly the most skilled investor in the world, politically, he is definitely not the smartest.

According to Alice Schroeder's superlative biography of the man, "Snowball", Buffett's switch from his father's brand of strict libertarianism (he would drive him past government offices at night to show him how they wasted energy by leaving the lights on) to his current feel good Democrat stance occurred in part thanks to his first wife Susie, who sensibilised him to the cause of black Americans, and even had Martin Luther King come and talk personally with him. He thereafter associated Republican with "racist". Another part of the problem, and my reading of the man based on the biography, is that he has always been looking for other people's approval. He thus turned into the habitual apologist for wealth that he is now as demonstrated above. He also created a myth of the "middle class man who has a million in the bank", but that is a myth, as the man loves luxury (nothing wrong with that and he certainly deserves every dollar he earned). He offered his wife furs, his house was extended into the biggest in the neighbourhood and he eventually acquired the Indefensible, a Gulfstream IV highlighting the hypocrisy of his attacks on corporate jets.

Another episode that may have prompted or emphasized his desire to please the common man was when he acquired a distressed company in a small town in small town America, which was the largest and almost sole employer of the community. Thinking him a vulture investor ready to strip the company dying a slow death in a dying industry, people demonstrated with his face on placards with rather insulting terms written underneath, which caused him - the soft spoken, enthusiastic, wouldn't harm a fly geek - substantial pain. This company was a textile firm known as Berkshire Hathaway and he still hasn't gotten over it.

When you read his letters (http://www.berkshirehathaway.com/letters/letters.html) you rapidly realize that the man is incredibly sharp and a ruthless and efficient manager and investor. What a shame that he has chosen to present himself in such an ambiguous manner to the wider public.

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... Buffet is avoiding the fact that the wealthy do not pay taxes on their wealth only on their income. So, "taxing the rich" is a misleading statement meant to invoke class warfare...

I remember an article in The Objectivist (or earlier?) in the 1960s about this but haven't been able to find it. As I recall it emphasized that the "rich" like the Kennedy parasites had enough assets to live out their lives in luxury even if all their income were taxes away, and that a major effect of the progressive income tax was to prevent others from becoming wealthy. Today it is even worse because there is an asset tax on the middle class in the form of much higher, exorbitant property taxes. The left is dragging us all down to a lowest common denominator while allowing the very wealthy to live like feudalists even if they don't produce anything.

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Buffet on last night's Rose episode

He had one memorable point, one to be used against Leftists who love to cite his views on taxing the wealthy: If borrowing forty cents of every government dollar spent hasn't pulled us out of this mess yet no stimulus package ever will.

Otherwise, the segment is all about nonsense like winning "the ovarian lottery" by being born here, that taxing the rich won't eliminate the debt, but . . ., that no investor ever turned him down because of the capital gains rate, etc.

Just goes to show that being bar-raising successful in one field doesn't even mean you can walk the length of a block without hurting yourself.

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... Buffet is avoiding the fact that the wealthy do not pay taxes on their wealth only on their income. So, "taxing the rich" is a misleading statement meant to invoke class warfare...

I remember an article in The Objectivist (or earlier?) in the 1960s about this but haven't been able to find it. As I recall it emphasized that the "rich" like the Kennedy parasites had enough assets to live out their lives in luxury even if all their income were taxes away, and that a major effect of the progressive income tax was to prevent others from becoming wealthy. Today it is even worse because there is an asset tax on the middle class in the form of much higher, exorbitant property taxes. The left is dragging us all down to a lowest common denominator while allowing the very wealthy to live like feudalists even if they don't produce anything.

Good point. I remember her mentioning something along those lines, but I don't remember where it was. Your point is well taken. It is well know that even if one were to tax 100% of the income from the wealthy, it would barely put a dent in the debt. As the saying goes, the money is where the middle class is!!

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The Real Reason Warren Buffett's Taxes Are Low
Mr. Buffett is not sharing the real reason that he doesn’t pay much in the way of income tax relative to his great fortune. The secret is hidden in plain sight. Mr. Worstall alludes to it when he mentions that Berkshire Hathaway does not in fact pay dividends. Mr. Buffett’s secret which you can find blasted all over the Internet is one of his famous quotations:

Our favorite holding period is forever

You only pay income taxes at any rate on realized appreciation. An investment with a holding period of forever incurs a capital gains tax of 0%, while all along the holder can be getting wealthy from appreciation.

Not only the above, but Buffet is avoiding the fact that the wealthy do not pay taxes on their wealth only on their income. So, "taxing the rich" is a misleading statement meant to invoke class warfare. He says he only paid 17% but does not say what his yearly income was nor what deductions he used. If he wants to contribute to the federal government, no one will stop him. But voluntary association is not part of his view of social relationships.

I found this in another source.

Buffett, chairman of the conglomerate Berkshire Hathaway, said his federal tax bill last year was $6,938,744, the equivalent of 64 shares of Berkshire Class A stock.

"That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income -- and that's actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent," he said.

So I guess his income was $40.8 million. How does that compare to the $14 trillion debt and the $114 trillion unfunded mandates, Mr. Buffet? What tax rate would you find justified?

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So I guess his income was $40.8 million. How does that compare to the $14 trillion debt and the $114 trillion unfunded mandates, Mr. Buffet? What tax rate would you find justified?

Doesn't matter to the statists. Take the French: they will attempt to earn 300 million EUR (1.43x that in USD) by increasing taxes on their wealthy (with a new 2% "wealth" tax on any net worth >1m EUR) and, most annoyingly, their expatriates. Nevermind that the deficit runs into the billions. It's symbolic, and most worryingly it comes from the right wing government which was voted in to reform and make the country freer.

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Take the French: they will attempt to earn 300 million EUR (1.43x that in USD) by increasing taxes on their wealthy (with a new 2% "wealth" tax on any net worth >1m EUR) and, most annoyingly, their expatriates.

Really? I guess we'll be seeing some expatriate French going to their respective embassies to annul their French citizenship. Too bad about those who only have permanent residence permits in their new country. What a tacky move...

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Take the French: they will attempt to earn 300 million EUR (1.43x that in USD) by increasing taxes on their wealthy (with a new 2% "wealth" tax on any net worth >1m EUR) and, most annoyingly, their expatriates.

Really? I guess we'll be seeing some expatriate French going to their respective embassies to annul their French citizenship. Too bad about those who only have permanent residence permits in their new country. What a tacky move...

Hasn't happened yet but it's the next logical step.

ENORMOUS resistance from Britain (of course, as London is the world capital for trading... US dollars!) and (more surprisingly) Sweden. There is literally no chance that it will go through as taxation agreements must be agreed upon by all 27 states of the Union, and Britain is not about to destroy its last remaining industry (although I can hear the Singaporeans and Hong Kong rubbing their hands with glee at finally having the chance of gaining global hegemony in something other than record low tax rates).

Phew!

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